Set Up ABC Information

This example demonstrates how to set up ABC classes, create ABC classification sets, and perform ABC assignments to perform ABC analysis. You set up ABC information in the Setup and Maintenance work area.

This table summarizes the key decisions for ABC analysis:

Decisions to Consider	In This Example
How to determine relative ranking of each item?	Create an ABC class
How to arrange the items in the decreasing order based on the defined criteria?	Create an ABC classification set
How to associate ABC classes with ABC classification sets?	Create ABC assignment groups
How to associate items to ABC classes within an ABC assignment group?	Perform ABC assignments
Can we update ABC assignments?	Yes
Can we purge an ABC assignment group?	Yes

Summary of the Tasks

In the Setup and Maintenance work area, you set up ABC information to perform ABC analysis:

1. Create an ABC class

2. Create an ABC classification set

3. Create ABC assignment groups

4. Perform ABC assignments

5. Update ABC assignments

6. Purge ABC assignment group

Creating an ABC class

You use ABC classes to identify the value groupings to which your items belong. You define these classes using your own terminology. For example, you might define classes A, B, and C, and later assign your items of highest rank to the A class, those of lower rank to the B class, and those of lowest rank to the C class. You can add to the list of classes you have already defined.

To create a new ABC class:

1. In the Setup and Maintenance work area, go to the Manage ABC Classes task:

   • Offering: Manufacturing and Supply Chain Materials Management

   • Functional Area: Inventory Management

   • Task: Manage ABC Classes

2. On the Manage ABC Classes page, click Actions > Add Row.

3. Enter the name in the ABC Class column.

4. Enter a date on which the class becomes active in the Start Date column.

5. Enter a date on which the class becomes inactive in the End Date column.

6. Click Save and Close.

Creating an ABC Classification Set

You define an ABC classification set for your organization or for a specific subinventory within your organization. You select the classification set criterion, the scope of your analysis, and any additional information that may be conditionally necessary, based on your classification set criterion.

To create a new ABC classification set:

1. In the Setup and Maintenance work area, go to the Manage ABC Classification Sets task:

   • Offering: Manufacturing and Supply Chain Materials Management

   • Functional Area: Inventory Management

   • Task: Manage ABC Classification Sets

2. On the Select Organization dialog box, select an organization and click OK.

3. On the Manage ABC Classification Sets page, click Actions > Create.

4. On the Create ABC Classification Sets dialog box, enter a name for the ABC classification set.

5. Select one of the these values for Content Scope:

   Value	Context
   Organization	To evaluate items in the entire organization against the criteria set in the ABC classification set.
   Subinventory	To evaluate items for their rankings against other items in the subinventory and not the entire organization. Select the subinventory to which you want to restrict the valuation. Additionally, select the value for Valuation Scope. If you want to restrict items only to the subinventory, select the valuation scope as Subinventory, but if you want the ranking done organization wide, select the valuation scope as Organization.

6. Select a value for Criteria and accordingly set the start date and end dates.

7. Click Submit.

Creating ABC Assignment Groups

You define an ABC assignment group to associate ABC classes with an ABC classification set. You assign items to ABC classes within a particular group. This lets you assign items to different ABC classes in different groups.

You use the data on the ABC Classification Set Items page as a guide when assigning items to ABC classes. On the ABC Classification Set Items page, you analyze the item data and decide which value (sequence, inventory, item percentage, or value percentage) to specify as the cutoff point of an ABC class.

To create an ABC assignment group:

1. In the Setup and Maintenance work area, go to the Manage ABC Assignment Groups task:

   • Offering: Manufacturing and Supply Chain Materials Management

   • Functional Area: Inventory Management

   • Task: Manage ABC Assignment Groups

2. On the Manage ABC Assignment Groups page, click Actions > Create.

3. On the Create ABC Assignment Group dialog box, enter a name for the ABC assignment group.

4. Select an ABC classification set. In the ABC Classes table, enter the sequence number in which classes are ordered and enter the name of the class to use with this ABC group.

   Note: The lower the sequence number the higher the importance of the class.

5. Click Save and Close.

Performing ABC assignments

You can assign and update ABC classes to an ABC assignment group where an ABC classification set was also entered. From the ABC Classification Set page you determine the cutoff points (sequence, inventory, item percentage, or value percentage) for assigning ABC classes. You can then use the classifications for other purposes such as determining how often you cycle count a given item.

To perform ABC assignments:

1. In the Setup and Maintenance work area, go to the Manage ABC Assignment Groups task:

   • Offering: Manufacturing and Supply Chain Materials Management

   • Functional Area: Inventory Management

   • Task: Manage ABC Assignment Groups

2. On the Manage ABC Assignment Groups page, search for the ABC assignment group and click Actions > Perform ABC Assignments.

3. On the ABC Assignments page, enter the cutoff points for each ABC class. Each ABC class must have at least one item assigned to it, and all items in the ABC classification set must be assigned to an ABC class. Complete any of the fields, as shown in this table.

   Field	Context
   Sequence	The sequence number from the ABC Classification Set page for the last item to be included in each ABC class.
   Inventory Value	The cumulative value from the ABC Classification Set page for the last item to include in each ABC class.
   Item Percentage	The percentage of number of items from the ABC Classification Set page to include in each class.
   Value Percentage	The percentage of total value from the ABC Classification Set page to include in each class.

   Note: For the Inventory Value, Item Percentage, and Value Percentage fields, if the value entered doesn't exactly match any item, the first item with a value greater than the value entered is allocated.

4. Click Save and Close.

Updating ABC Assignments

You can change the class into which an item falls as a result of the automatic ABC assignment process if it isn't appropriate. You can update an ABC group to include those items that weren't a part of the initial ABC classification set. By updating the ABC group, you can expand the scope of your existing ABC classification sets without having to rerun any processes.

To update ABC assignments:

1. In the Setup and Maintenance work area, go to the Manage ABC Assignment Groups task:

   • Offering: Manufacturing and Supply Chain Materials Management

   • Functional Area: Inventory Management

   • Task: Manage ABC Assignment Groups

2. On the Manage ABC Assignment Groups page, search for the ABC assignment group and search for the ABC assignment group and click Actions > Update ABC Assignments.

3. On the Update ABC Assignments page, enter an inventory item and a valid ABC class.

4. Click Save and Close.

Purging an ABC Assignment Group

You can purge an ABC group to delete all item assignments to ABC classes for the assignment group, as well as the ABC group itself. By purging an ABC classification set, you delete all item values and ranking for the ABC classification set, as well as the ABC classification set itself.

Note: You can purge an ABC classification set only when no ABC groups are using it.

1. In the Setup and Maintenance work area, go to the Manage ABC Assignment Groups task:

   • Offering: Manufacturing and Supply Chain Materials Management

   • Functional Area: Inventory Management

   • Task: Manage ABC Assignment Groups

2. On the Manage ABC Assignment Groups page, search for the ABC assignment group.

3. Select a row in the search results and click Actions > Purge ABC Assignment Group.